Tuesday, December 31, 2013

Stocks to Watch: OncoMed, Lexicon, Krispy Kreme

Among the companies with shares expected to actively trade in Tuesday’s session are OncoMed Pharmaceuticals Inc.(OMED), Lexicon Pharmaceuticals Inc.(LXRX) and Krispy Kreme Doughnuts Inc.(KKD)

OncoMed and Celgene Corp.(CELG) agreed to jointly develop and commercialize up to six potential anti-cancer stem cell treatments from OncoMed’s pipeline, providing OncoMed with an infusion of cash to study the treatments. OncoMed shares surged 68% to $23.48 premarket, while Celgene was inactive.

Lexicon said a study revealed its drug to treat irritable bowel syndrome doesn’t significantly affect stool consistency, an important indicator of IBS treatment. The drug company’s shares dropped 12% to $2.05 in premarket trading.

Krispy Kreme Doughnuts Inc.’s fiscal third-quarter profit grew 34% as the doughnut chain reported higher same-store sales and growth at franchise locations in the U.S. But shares slid 13% to $21.25 in premarket trading, as investors focused on muted comments on earnings for the upcoming fiscal year.

Conatus Pharmaceuticals Inc.'s(CNAT) shares jumped 26% to $7.75 premarket after the biotechnology firm said its treatment for chronic liver disease has been granted a status that could mean quicker approval.

Ascena Retail Group Inc.'s(ASNA) fiscal first-quarter earnings rose 22% as the apparel retailer reported broad sales growth and stronger margins. Shares of Ascena, which affirmed its fiscal-year guidance, were up 4.2% at $21.75 in premarket trading as adjusted earnings and revenue beat expectations.

Activist investors Corvex Management LP and Related Cos. made a preliminary filing with the U.S. Securities and Exchange Commission in their renewed effort to replace CommonWealth REIT's(CWH) board following an arbitration panel ruling allowing the move.

Energen Corp.(EGN) said it expects last month’s severe weather in West Texas to weigh on results from the oil-and-gas production company’s Permian Basin operations.

Fifth & Pacific Cos.(FNP) is nearing a deal to sell its Lucky Brand denim business after an auction that had stalled regained momentum this fall, people familiar with the matter told The Wall Street Journal.

Hertz Global Holdings Inc.(HTZ) named former Hilton Worldwide Inc. executive Thomas Kennedy to the car-rental firm’s chief financial officer post, effective a week from Monday.

NCR Corp.(NCR), a maker of automatic teller machines, has agreed to pay $1.65 billion to acquire outsourced online banking firm Digital Insight Corp., a move to address rising consumer interest to bank across multiple channels.

NRG Yield Inc.(NYLD) agreed to purchase privately held Energy Systems Co. for $120 million in cash, which the company hopes will help it increase its dividend payments as well as its geographic diversity. Energy Systems is an Omaha, Neb.-based supplier of district energy.

Office Depot Inc.(ODP) has added a second former Wendy's Co.(WEN) executive to the office retailer’s new executive team, naming Stephen Hare to serve in the chief financial officer role, effective immediately.

Oneok Partners LP(OKS) issued guidance for 2014 that surpasses its estimate for the current year, citing growth in natural-gas volumes.

QEP Resources Inc.(QEP) plans to separate its midstream business, QEP Field Services Co., into a separate entity, including its interest in QEP Midstream Partners LP(QEPM).

Quiksilver Inc.(ZQK) unveiled plans to pursue the sale and exit of several more noncore businesses, following the sports outfitter’s $58 million divestiture of its Mervin snowboard unit last month. The businesses Quiksilver plans to shed include Surfdome Shop Ltd., Hawk Designs, Inc., its Moskova brand and its business under license with Maui & Sons.

Shoe Carnival Inc.'s(SCVL) fiscal third-quarter earnings slid 11%, with revenue declining due to an unfavorable calendar shift from the previous year.

Thor Industries Inc.'s(THO) fiscal first-quarter earnings rose 33% on the strength of higher sales and wider margins. But results came in lower than expected.

Restaurant operator Yum Brands Inc.(YUM) estimated adjusted earnings for fiscal 2014 will rise “at least” 20% from the prior year’s level, a target that suggests the company could meet Wall Street’s latest expectations.

The Celtic Tiger Roars

Hot Medical Companies To Watch In Right Now

Print FriendlyIn 2009, the European Union (EU) and the International Monetary Fund (IMF) teamed up to provide an €85 billion bailout package to Ireland, which was suffering from a severe banking crisis at the time. As in many other countries, Irish banks had become dependent on short-term funding and excessive borrowing to fuel the country’s rapid growth during its “Celtic Tiger” period which ran from 1995 – 2006, with much of the capital coming from abroad.

But two weeks ago, the Irish government announced that it would exit the EU-IMF program, eschewing access to the region’s precautionary credit line program as it reenters the global credit markets in February. It will also repay the loans it has already received by 2042.

Many have marveled at the Irish decision to operate without a safety net, but the government has built up a cash reserve of €20 billion as it raises money in the bond markets in recent months. In fact the Irish sovereign yield of about 4.5 percent—slightly above the yield on German bunds but well below that of Greek sovereigns—was a major driver of the decision to exit the bailout program. Its current cash on hand should allow the government to meet its financial obligations through 2015.

At the same time, after several quarters of negative gross domestic product (GDP) growth, in the third quarter Irish GDP grew by 3.6 percent and is forecast to continue growing through next year. The labor market in the country in also turning around, adding new jobs in the first three quarters of this year.

The government has also benefitted from the fact that it was fairly quick in recognizing its economic programs, creating the National Asset Management Agency—the Irish government’s version of th! e US Troubled Asset Relief Program—which purchased about €81 billion worth of bad Irish bank loans in 2009. In addition to helping to alleviate the capital programs Irish banks were facing, the government has had a fair amount of success in selling off a bit more than €11 billion worth of the loans so far.

Despite the decision to exit the bailout program, Ireland isn’t exactly facing smoothing sailing from here.
The country’s debt-to-GDP ratio has more than doubled over the past five years, reaching 113 percent, a fact that will likely trouble international investors.

The country also is entering the global capital markets, even as it appears increasingly likely that the US Federal Reserve will begin backing off its own easy money policies in the next six months or so. That’s sure to result in rising Treasury rates and, since they are considered the global benchmark, Irish bond yields will have to offer an attractive premium to entice investors.

Ireland has also been struggling against a surprisingly resilient euro which has remained strong against the US dollar, with one greenback currently fetching only about €0.74. The euro has largely been trading on the fundamentals of its core states such as Germany, resulting in a strong currency that poses a headwind for other, troubled member states. That’s particularly true of Ireland whose economy is almost entirely dependent upon exports and tourism even in good times.

That said, a successful Irish reentry into global capital markets would provide a huge lift to the EU. While Ireland’s sovereign yields are only half those of Spain’s and half again of Greece’s, its exit from the bailout would serve as a roadmap for other troubled European economies. Its successful exit will also free up resources that can then be devoted to getting more troubled economies—notably Greece and Spain—back on track.

It will also be an important vindication of the EU&rsq! uo;s emph! asis on what, at the time, appeared to be harsh requirements for key internal reforms that forced debtor nations to bear almost all the pain of recovery. Those reforms have created an uphill growth battle for countries such as Greece and Portugal, which still haven’t quite gotten their legs beneath them.

Ireland’s exit also creates a showdown of sorts between the EU and the IMF. Even as the Irish recovery lends credence to the EU’s strategy, the IMF has begun pushing for a plan that would force bondholders to bear upfront losses the next time a euro zone country requires a bailout. Pointing to the Greek example, the IMF believes that German-driven austerity measures run the risk of only exacerbating the problems.

The relative success of the Irish recovery will only embolden the German-led austerity block, complicating the IMF’s case for a more forgiving bailout mechanism. It also makes it tougher to make the case that different countries require different policy prescriptions to foster a recovery. If the EU were to take a different tack with Greece now, it would be akin to the US government agreeing to bailout California while leaving Illinois to deal with its own mess.

Regardless of the potential pitfalls that still remain, while Ireland’s reentry into the global capital markets won’t mark a return to more halcyon days for the region, if the Irish are successful it only underscores the attractiveness of European markets.

Chinese Skeptics Deepen Biggest A-Share Discount in 3 Years

China's largest package of economic reforms since the 1990s is getting a bigger vote of confidence from foreign investors than from the nation's own citizens.

The benchmark index for Chinese stocks traded in Hong Kong has jumped 6.2 percent, more than twice as much as the Shanghai gauge, since policy makers led by President Xi Jinping pledged to ease China's one-child policy and liberalize interest rates on Nov. 15. That left mainland shares valued at a 5.8 percent discount, the most in three years, according to the Hang Seng China AH Premium Index.

In a year when Asia's benchmark stock index is up 10 percent and U.S. shares are rising the most in a decade, China's market is getting little respect. The Shanghai Composite is down 3.4 percent, trailing its Hong Kong counterpart by the most since 2010. Investors saddled with $698 billion of lost market value since 2010 are proving difficult to win back even as valuations in industries such as cement and transportation offer some of the biggest discounts ever versus shares traded outside the mainland.

"I am not in a hurry to buy stocks," said Chen Yifeng, a 35-year-old accountant at a state-owned company in Shanghai whose personal investments in the domestic equity market are valued at about 40,000 yuan ($6,566). "I need to see exactly how and when these changes mentioned in the meeting will be implemented. The confidence in the local market takes time to recover."

Relative Value

Perceptions of China, which contributed most to the global economy's rebound from the 2008 financial crisis, influence investment decisions around the world. Laurence D. Fink, the chief executive officer at BlackRock Inc., the largest money manager, said he's "less worried" about the outlook for markets in part because of China's reforms.

Best Biotech Companies To Buy Right Now

The Shanghai Composite added 0.6 percent to 2,206.61 at the close today, while the Hang Seng China Enterprises Index of mainland shares listed in Hong Kong rose 0.6 percent. The Hang Seng China AH Premium index dropped for a fifth day.

China's benchmark 10-year bond yield climbed to the highest level on record yesterday amid speculation borrowing costs will rise as the government loosens its grip on financial markets in the world's second-biggest economy. Volatility in the yuan touched a five-month high today.

Performance Gap

Policies detailed by the Communist Party on Nov. 15 include steps to expand farmers' land rights, let qualified private investors set up small-to-medium sized banks, accelerate the convertibility of the yuan and free-up interest rates. The document covers 60 measures designed to help elevate the role of markets while keeping the state in a "dominant" position.

The Hang Seng China index surged the most since December 2011 on Nov. 18, and narrowed its loss this year to 0.6 percent as of yesterday. The Shanghai Composite pared its 2013 decline to 3.4 percent, versus a 10 percent gain for the MSCI Asia Pacific Index.

The different performance is also evident in the specific stocks. Shanghai-traded shares of Anhui Conch Cement Co. closed yesterday at a 25 percent discount versus the company's Hong Kong-traded shares, compared with an average difference of 12 percent during the past five years. Toll-road operator Jiangsu Expressway Co. (177)'s mainland-listed equities trade at a 26 percent discount, within 1 percent of the biggest gap on record, data compiled by Bloomberg show.

Investment Caps

The spread between the two markets has existed historically because of investment limitations in China. The nation restricts access to its local equity markets through its qualified foreign institutional investor, or QFII, program. The government approved $48.5 billion of QFII quotas as of Oct. 30, up from $47.5 billion a month earlier, according to a statement posted on website of the State Administration of Foreign Exchange. That accounts for about 1.5 percent of China's $3.3 trillion market capitalization.

Foreign investors are less bearish because China's new policies will make long-term economic growth more sustainable, said Chen Li, a strategist at UBS AG in Shanghai. The rally will probably continue for the next two to three months as the government unveils further policy details while low valuations versus the rest of the world lure investors, said Chen, who favors insurers and makers of discretionary consumer goods.

'Quite Cheap'

The Shanghai Composite trades for 11 times reported earnings, a 21 percent discount versus the MSCI Asia Pacific Index, which is valued at 14 times profit, according to data compiled by Bloomberg. The Hang Seng China gauge has a multiple of 8.5, the data show.

"We still believe it's a good time to buy China in the long term," said Michael Chiu, an investment director for equities at HSBC Global Asset Management, which oversees about $419 billion. Chinese shares in Hong Kong and the mainland "are still quite cheap in valuation," he said.

Tang Jianhua, a 35-year-old engineer in Shanghai, says he's waiting to see how the government executes its reform plans before adding to his personal stock holdings.

The new policies "are all good but no one knows for sure about the implementation," said Tang. "It's not necessary to invest in a market where there's uncertainty and the general environment isn't that good."

Economy Risk

The Shanghai Composite climbed 21 percent in the six months after former President Hu helmed the Communist Party's policy meeting in October 2003, then erased all of its gains to trade about 4 percent lower by October 2004, according to data compiled by Bloomberg.

While China's leaders were focused on "rebalancing" the economy in 2003, many of the imbalances identified in that year's policy document worsened over the next 10 years, Stephen Green, head of Greater China research at Standard Chartered Plc in Hong Kong, wrote in a Sept. 2 research report.

Companies with the word Shanghai in their names added about $45 billion of market value in a month, more than Vietnam's entire stock market, after China's commerce ministry said on Aug. 22 that the government approved a free-trade zone in Shanghai.

Shanghai International Port Group Co., which led the rally in stocks linked to the free-trade zone, has tumbled 21 percent during the past two months as detailed plans for the area disappointed investors.

Short-Term Drag

"The prospects of Chinese equities are positive for the long-term, but near-term there are some execution risks with regard to implementing reforms," said Teresa Chow, a Hong Kong-based money manager who helps oversee about $1.5 billion at RBC Investment (Asia) Ltd. "Mainland investors seem to have more reasonable expectations."

China's plans to loosen the state's grip on credit and raw-materials costs, reduce lavish spending by government officials and improve environmental protection may turn into a short-term drag on economic growth, said Grace Tam, a Hong Kong-based global market strategist at JPMorgan Asset Management, which oversees about $1.5 trillion.

Local companies have postponed or scrapped 73.5 billion yuan of bond sales in November, up from 29.8 billion yuan last month, according to filings on the websites of Chinamoney, Chinabond and Shanghai Clearing House.

The nation's economy will probably expand 7.6 percent this year, according to the median of 53 estimates compiled by Bloomberg. That would be down from 7.7 percent in 2012 and the same pace as 1999, which was the weakest expansion since 1990.

"Foreign investors focus more on the long-term gain," said Tam. "The domestic players are more concerned about the short-term pain."

Monday, December 30, 2013

How Facebook gets rich leveraging personas

(Editor's note: In this guest essay, Mark Weinstein, founder and CEO of Sgrouples.com, a privacy-centric social network, breaks down Facebook's profit model.)

On October 30th, Facebook held its third quarter earnings call. Lost inside the upbeat state of the union was a recurring theme that active and inactive Facebook users need to take note of: Facebook is knowingly placing your information at risk and needs to do more of it in order to survive.

A few years back Facebook founder Mark Zuckerberg announced that privacy was dead. That declaration expectedly ruffled a lot of feathers, causing Zuckerberg to step back and makeover his message. What emerged was a positive spin of the same sentiment, one that helped him reframe the equation. Instead of having to defend the company against accusations concerning privacy, safety, and data mining abuses, Facebook would focus on helping us all "understand the world."

This simple three-word statement has become one of the core components of Facebook's current investor messaging along with similar ideas of "connecting everyone" and "helping to build the knowledge economy."

Tantalizing investors and users alike however with optimistic promises to build "the clearest model of everything there is to know in the world" is one thing. Delivering on it is entirely another. While the sentiment rings deeply philosophical, it sadly ends up rather shallow.

What Zuckerberg wants is a world where Facebook can use your information, without limitations, to figure out everything there is to know about you to target marketing for Facebook's gain. Sound farfetched? Guess again.

Top 5 Stocks To Watch For 2014

This year Facebook introduced Graph Search, which makes every piece of Facebook content shared by or with you accessible through natural language queries. Then last quarter came Posts Search, which lets you search all unstructured text and posts that peop! le have ever made on Facebook. Then just last month Facebook formed a new artificial intelligence (AI) group.

Straight from the pages of a Ray Bradbury novel comes a secretive department whose goal is to hone "all of the knowledge that people have shared on Facebook…to help make sense of all the content that people share so we can generate new insights about the world to answer people's questions."

What does this AI group really mean? Artificial intelligence has the potential to help Facebook recognize emotions behind texts and analyze photos. Based on this level of understanding, Facebook could then predict the likely future behavior of each of us.

With the recent acquisition of Mobile Technologies, Facebook intends to use AI to also delve into speech recognition and machine translation as well to further figure out how to use who you are to its advantage. All of these technology advances make for fascinating conversation, but do little to help the user. For Facebook though, these tools simplify the path to growing ad revenue. By knowing you Facebook can best help its advertisers sell to you.

When did signing up with a social network become a vehicle for signing away your identity? Should any group within any company have the right to break down every aspect of your five senses for profitable gain? How far do we allow any business to push the safety envelope in the name of revenue?

When I started Sgrouples, I did so with the intent of combining social media with personal privacy. As a conscious capitalist, I believe that social media presents a profitable opportunity that can and should put the user experience at the forefront of the medium and that can and should better society by enabling us to communicate more closely with one another. Underneath my intentions lies a common theme of user safety, one which I fail to see in Facebook's model. We should all get to enjoy the wonderful benefits and pleasures that social media affords us, but under an umbrella of safety that! visibly ! protects us and gives us the peace of mind we want when online and interacting in our everyday lives.

About the essayist: Mark Weinstein, is the author of the Habitually Great book series, and a Huffington Post privacy blogger. He is the founder and CEO of Sgrouples.com, a privacy-centric social network that, he says, is positioned to lead the privacy revolution.

Sunday, December 29, 2013

Hot Gold Stocks To Invest In 2014

With shares of Goldman Sachs (NYSE:GS) trading around $170, is GS an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let�� analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Goldman Sachs is engaged in investment banking, securities, and investment management. It provides a range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments, and high net worth individuals. The company operates in four segments: investment banking, institutional client services, investing and lending, and investment management. Through its segments, Goldman Sachs provides valuable investment services to consumers and companies worldwide.

Goldman Sachs lowered shares of RWE AG (NASDAQ:RWEOY) from a buy rating to a neutral rating in a report released.�The company has also modified their ratings on a number of other stocks in the few days. The firm upgraded shares of IAMGOLD Corp. from a sell rating to a neutral rating. Also, Goldman Sachs initiated coverage on shares of MarkWest Energy Partners. They issued a buy rating on that stock. Finally, Goldman Sachs initiated coverage on shares of DCP Midstream Partners, LP. They issued a buy rating on that stock.

Hot Gold Stocks To Invest In 2014: Golden Star Resources Ltd(GSS)

Golden Star Resources Ltd., a gold mining and exploration company, through its subsidiaries, engages in the acquisition, exploration, development, and production of gold properties. It owns and operates the Bogoso/Prestea gold mining and processing operation that covers approximately 40 kilometers of strike along the southwest-trending Ashanti gold district in western Ghana; and the Wassa open-pit gold mine located to the east of Bogoso/Prestea in southwest Ghana. The company also has an 81% interest in the Prestea underground gold mine located in Ghana. In addition, it holds interests in various gold exploration projects in Ghana, Sierra Leone, Burkina Faso, Niger, and Cote d?Ivoire, as well as holds and manages exploration properties in Brazil in South America. The company was founded in 1984 and is based in Littleton, Colorado.

Advisors' Opinion:
  • [By Patricio Kehoe] ating price of the commodity, along with the geopolitical risks involved in mining in African nations such as Ghana, are just two of the obstacles the firm is facing. In addition, as one of the smallest gold mining firms in the industry, with a market cap of just $122 million, Golden Star has had a very difficult time financing its latest expansion projects. With share prices tumbling towards all-time lows, gurus such as Steven Cohen, Chuck Royce and Arnold Schneider have already sold out their positions in the troubled firm.

    Why Have Gurus Lost Faith in Golden Star?

    Despite aggressive expansion over the past decade, the Toronto-based gold mining firm has not been able to take advantage of its increased production output. Gold prices might have exploded over a ten-year period, yet the recent six-month decline has put a huge strain on Golden Star. The expedited maturation of its mines is particularly troubling, since the accelerated extraction rates, which allowed for short-term profits, are now falling considerably. The impact of the company�� excessive overproduction on profits and growth is clear: decreasing gold reserves mean less production, and thus reduced revenue for the gold miner. When the decline in metal prices are taken into account, the outlook is even more grim.

    In addition to overexpansion at the wrong time, Golden Star�� position has weakened due to its comparably less efficient operations. Unlike industry peers, such as IamGold Corp. (IAG) or Gold Fields Ltd. (GFI), the majority of the Toronto-based miner�� assets contain refractory ore, which is far more expensive to extract than non refractory ore. And, in an attempt to switch production to the lower cost gold ore, and thus increase margins, Golden Star has depleted its mines��non refractory ore. With low reserves and mounting cash costs, the firm inevitably turned to new acquisitions.

    Overpriced Acquisitions and Geopolitical Risk

    The purchase

  • [By Sean Williams]

    Golden Star Resources (NYSEMKT: GSS  )
    It's simple physics: The bigger they are, the harder they fall. When gold prices nosedived earlier this week, gold miners with historically higher operating costs took the brunt of the hit. For the most part, that meant that development-stage miners, and those operating in Africa, where labor and political costs make cost-effective mining a challenge, took it on the chin. Possibly no stock was hammered more than Golden Star Resources, a gold miner in Ghana, which lost about one-quarter of its value on Monday alone.

Hot Gold Stocks To Invest In 2014: Goldcorp Incorporated(GG)

Goldcorp Inc. engages in the acquisition, exploration, development, and operation of precious metal properties in Canada, the United States, Mexico, and Central and South America. It produces and sells gold, silver, copper, lead, and zinc. The company was founded in 1954 and is headquartered in Vancouver, Canada.

Advisors' Opinion:
  • [By Jonathan Yates]

    That is very bullish for companies in the gold sector such as Barrick Gold (NYSE: ABX), Goldcorp (NYSE: GG), Wishbone Gold (OTC: WISHY) and Yamana Gold (NYSE: AUY).

Hot Financial Stocks For 2014: Newmont Mining Corporation(Holding Company)

Newmont Mining Corporation, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties. The company?s assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand, and Mexico. As of December 31, 2009, it had proven and probable gold reserves of approximately 93.5 million equity ounces and an aggregate land position of approximately 27,500 square miles. The company was founded in 1916 and is headquartered in Greenwood Village, Colorado.

Hot Gold Stocks To Invest In 2014: Thompson Creek Metals Company Inc.(TC)

Thompson Creek Metals Company Inc., through its subsidiaries, engages in mining, milling, processing, and marketing molybdenum products in the United States and Canada. The company?s principal properties include the Thompson Creek Mine and mill in Idaho; a metallurgical roasting facility in Langeloth, Pennsylvania; and a joint venture interest in the Endako Mine, mill, and roasting facility in British Columbia. It also holds interests in development projects comprising the Davidson molybdenum property and the Berg copper-molybdenum-silver property located in northern British Columbia; the Howard?s Pass property, a lead and zinc project situated in the Yukon territory-northwest territories border; and the Maze Lake property, a gold project located in the Kivalliq district of Nunavut. The company produces molybdenum products, primarily molybdic oxide and ferromolybdenum, as well as soluble technical oxide, pure molybdenum tri-oxide, and high purity molybdenum disulfide. As o f December 31, 2010, its consolidated recoverable proven and probable ore reserves totaled 462.2 million pounds of contained molybdenum in the Thompson Creek Mine and the Endako Mine. The company was formerly known as Blue Pearl Mining Ltd. and changed its name to Thompson Creek Metals Company Inc. in May 2007. Thompson Creek Metals Company Inc. is based in Denver, Colorado.

Advisors' Opinion:
  • [By Selena Maranjian]

    Beaten-down companies that you think are likely to recover strongly are also good candidates. Molybdenum miner Thompson Creek Metals (NYSE: TC  ) , for example, sports average annual losses of 35% over the past five years, and carries substantial debt, but molybdenum's long-term outlook is promising, with price increases likely, and the company has a promising gold and copper mine on track to start producing by the end of the year. Freeport-McMoRan Copper & Gold (NYSE: FCX  ) is another major molybdenum player, with considerable operations in other metals, as well -- along with new investments in oil and gas production.

  • [By Jim Jubak]

    The stock market liked what it heard Wednesday, August 7, from Thompson Creek Metals (TC) after the close in New York. Second quarter adjusted net earnings of 8 cents a share crushed the Wall Street consensus of a penny a share. Revenue climbed 3.8% to $117.8 million versus expectations for revenue of just $1.3.8 million. The company also said that its new Mt. Milligan mine is on schedule with a start-up for the concentrator expected this month, with first ore-feed by mid-August. The company said it expects commercial production to begin in the fourth quarter of 2013, with production ramping to full capacity over the next twelve months.

Hot Gold Stocks To Invest In 2014: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

Hot Gold Stocks To Invest In 2014: Australian Dollar(AU)

AngloGold Ashanti Limited primarily engages in the exploration and production of gold. It also produces silver, uranium oxide, and sulfuric acid. The company conducts gold-mining operations in South Africa; continental Africa, including Ghana, Guinea, Mali, Namibia, and Tanzania; Australia; and the Americas, which include Argentina, Brazil, and the United States. It also has mining or exploration operations in the Democratic Republic of the Congo, Guinea, and Colombia. As of December 31, 2010, the company had proved and probable gold reserves of 71.2 million ounces. The company has a strategic alliance with Thani Dubai Mining Limited to explore, develop, and operate mines across the Middle East and parts of North Africa. AngloGold Ashanti Limited, formerly known as Vaal Reefs Exploration and Mining Company Limited, was founded in 1944 and is headquartered in Johannesburg, South Africa.

Advisors' Opinion:
  • [By Holly LaFon]

    The second largest market cap company, at $11.22 billion, is Anglogold Ashanti Ltd. (AU). Its afternoon stock price of $29.15 is within 5% of its three-year low, and has experienced a more significant drop than Newmont ��it is down 44.9% from its high price of $52.86 a share.

Hot Gold Stocks To Invest In 2014: Northgate Minerals Corporation(NXG)

Northgate Minerals Corporation, together with its subsidiaries, engages in exploring, developing, processing, and mining gold and copper deposits in Canada and Australia. Its principal producing assets include 100% interests in the Fosterville and Stawell Gold mines in Victoria, Australia; and the Kemess South mine located in north-central British Columbia, Canada. The company was formerly known as Northgate Exploration Limited and changed its name to Northgate Minerals Corporation in May 2004. Northgate Minerals Corporation was founded in 1919 and is headquartered in Toronto, Canada.

Hot Gold Stocks To Invest In 2014: Agnico-Eagle Mines Limited(AEM)

Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. The company primarily explores for gold, as well as silver, copper, zinc, and lead. Its flagship property includes the LaRonde mine located in the southern portion of the Abitibi volcanic belt, Canada. The company was founded in 1953 and is based in Toronto, Canada.

Advisors' Opinion:
  • [By Patricio Kehoe] e, has cash costs of $912 per ounce, and Agnico Eagle�� costs do not even reach the $700 per ounce mark. Hence, it comes as little surprise that revenue has been decreasing steadily, since gold prices are hovering around the $1300 mark at best. As the company is hemorrhaging money, investment gurus the like of John Burbank and Seth Klarman have decided to sell their entire stake in the firm. I agree with this bearish stance, and recommend investors stay away from Kinross Gold.

    Any Long Term Investment?

    If you were to follow Jean-Marie Eveillard�� purchases, one would be inclined to see good growth prospects for Agnico Eagle, and thus believe in this stock�� potential. And, you wouldn�� be wrong, as the firm has been growing at a steady pace, with no end in sight to its expansion possibilities. However, with a 171% price premium, investors might be better off waiting until a more favorable entry-point is available. Nevertheless, as a long-term investment, I feel highly optimistic and would thus even consider paying the additional cost.

    Disclosure: Patricio Kehoe holds no position in any stocks mentioned.

    Also check out: Jean-Marie Eveillard Undervalued Stocks Jean-Marie Eveillard Top Growth Companies Jean-Marie Eveillard High Yield stocks, and Stocks that Jean-Marie Eveillard keeps buying John Burbank Undervalued Stocks John Burbank Top Growth Companies John Burbank High Yield stocks, and Stocks that John Burbank keeps buying
    The Strategy of Ben Graham ��Warren Buffett�� Mentor From 1923 to 1957 Warren Buffett�� mentor, Ben Graham, followed a strategy of investing in net-nets. He said: ��t always seemed, and still seems ridiculously simple to say that if one can acquire a diversified group of common stocks at a price less than the...net current assets alone��he results should be quite satisfactory. They were so in our experience, for more than 30 years.��br> Today net-nets are rare. They are collected under Gu

  • [By Holly LaFon]

    He increased his holdings in gold companies in the fourth quarter accordingly. Gold stocks he found attractive in the fourth quarter are: Novagold Resources (NG), Randgold Resources (GOLD), Iamgold Corp. (IAG), Barrick Gold Corp. (ABX), Agnico Eagle (AEM) and International Tower Hill (THM).

  • [By Dan Caplinger]

    In the longer term, IAMGOLD could potential challenges from higher taxes on some of its holdings. The Canadian province of Quebec is considering changing the current 16% profit tax either to what amounts to a gross revenue tax or to a more progressive profit tax with higher rates on high-margin mining operations. Under current conditions, those taxes might not have much effect either on IAMGOLD or rivals Agnico-Eagle (NYSE: AEM  ) and Goldcorp (NYSE: GG  ) , both of which also have projects in the province, but it's hard to predict how a changes might affect future results if they take effect.

Saturday, December 28, 2013

CSX Corp Announces Q3 Earnings; Beats Estimates (CSX)

After the bell on Tuesday, CSX Corp (CSX) announced its third quarter results, with earnings increasing from last year’s same quarter.

The Jacksonville, FL-based transportation company reported revenues of $3 billion, which came in higher than analysts’ estimates of $2.94 billion. CSX announced earnings of $463 million, or 46 cents per share, which were up from last year’s Q3 figure of $455 million, or 44 cents per share. The company’s quarterly EPS results beat the analyst outlook of 43 cents.

Best Medical Companies To Own For 2014

Looking ahead, the company stated that it expects its EPS results for the full year to be up from 2012′s earnings.

CSX shares were up 8 cents, or 0.31%, by Tuesday’s market close. YTD, the company’s stock is up 29%.

Friday, December 27, 2013

Cisco, IBM slip, but Micron, Autodesk rise

SAN FRANCISCO (MarketWatch) — Technology stocks were mostly in the red Wednesday as the federal government shutdown entered its second day, but the sector got a boost from some social media and chip stocks.

The Nasdaq Composite Index (COMP)  shed 0.2% to 3,811, while the Morgan Stanley High Tech 35 Index (MSH)  and the Philadelphia Semiconductor Index (SOX)  were each off a fraction.

Reuters BlackBerry slides after it says it expects even bigger restructuring charges.

IBM Corp (IBM)  was down 0.5%, while Cisco Systems (CSCO)  was off 0.3% and Intel Corp. (INTC)  gave up 0.2%.

BlackBerry (BBRY)   shed nearly 5% after the company said it expects even bigger restructuring charges and disclosed even more serious facing challenges. The mobile tech company had announced a $4.7 billion deal to go private.

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On the upside, Apple Inc. (AAPL)  , Facebook Inc. (FB)  , LinkedIn Corp. (LNKD)  and Yelp Inc. (YELP)  were each up a fraction.

Micron Technology (MU)  stood out in early trades, rising 1%. A Sterne Agee report on Tuesday pointed to signs of strong demand for mobile DRAM processors, playing down worries of a slowdown.

Hot Gold Stocks To Invest In 2014

Shares of Autodesk Inc. (ADSK)  also rallied more than 3% after the design-software company announced Wednesday that it was acquiring Graitec's Advance Steel and Advance Concrete product lines.

Higher earnings limit applies in the year worker reaches 66

retirement, social security, earnings, mary beth franklin

My recent column on how the Social Security earnings cap is applied during the first year of retirement triggered several more questions.

Normally, people who collect Social Security benefits before the full retirement age of 66 must forfeit $1 in benefits for every $2 earned over a prescribed limit. For this year, the earnings cap is $15,120.

It is important to note that these benefit reductions aren't truly lost but merely deferred. Benefits will be increased at full retirement age to account for benefits that were withheld due to earnings.

So, say an individual collected benefits at 62 and ultimately forfeited 12 months' worth of benefits over the next four years. Once that person reached full retirement age, Social Security would recalculate the benefits as if they began to be collected at 63, instead of 62, resulting in a higher amount going forward.

As I noted in my recen

Thursday, December 26, 2013

Larger-than-Life Kyle Bass - Top Yields

Top Dividend Stocks For 2014

Looking through a kaleidoscope of facts about J. Kyle Bass, this guru quickly takes on a colorful and larger-than-life mythos. Hailing from the big-thinking state of Texas, Bass is often described as a big dreamer with a studious and practical streak. His career blossomed almost overnight when he reportedly made around a half a billion dollars betting against subprime CDOs in 2007. Bass comes across as a visionary who asks why not instead of why. He told CNBC that he likes to reduce email time and cut out the noise by learning about world markets through symbiotic relationships with friends like Alan Fournier and other billionaires. Every year Bass invites his notable friends to his ranch in Larue, Texas, for a special event called The Barefoot Economic Summit, Texas (BEST). Bass said he learns more in two days of the summit than in two months of emails.

Kyle Bass is the managing member and principal of Hayman Advisors LP’s general partner formed in December 2005, with $10 million of his own money. Based in Dallas, Hayman Advisors serves as the investment manager to the Hayman Capital Master Fund LP and Japan Macro Opportunities Master Fund LP. According to GuruFocus research, Guru Kyle Bass shows a pattern of making bold bets based on his view of macroeconomics. He returned 340% in his firm’s first four years, establishing a worldwide reputation for Bass.

Kyle Bass is a unique super-investor. According to D Magazine, Bass is politically connected – Texas Governor Rick Perry has attended his summit. Bass reportedly does not vote or read the local newspaper. Well-known for his investment analysis of the subprime crisis that borders on prescience, Bass has also carved out opportunity in the Japanese market, and more recently, turned his sites towards Argentina, saying, “Argentina’s problems can be fixed in two years and now is the tim! e to start investing.”

Kyle Bass has been called to high places to offer his authoritative opinion. In September 2007, Bass appeared as an expert witness before the House of Representatives Financial Services Capital Markets Subcommittee. Three years later, he appeared as a Financial Market Participant before the Financial Crisis Inquiry Commission, established by Congress to examine the causes of the financial crisis. He is on the Board of Directors for The University of Texas Investment Management Co. (with $16 billion assets under management) and is a founding member of the Serengeti Asset Management Advisory Board.

The updated portfolio of Hayman Advisors lists 14 stocks, eight of them new, with a total value of $408 million, and a quarter-over-quarter turnover of 91%. The portfolio is heavily weighted with consumer cyclical at 26.6% and real estate at 19.8%. The stocks bought by Kyle Bass have averaged a 12-month return of 7.14%.

Here’s a review of the top-yield stocks in the Hayman Advisors portfolio. All of them were new buys as of Sept. 30, 2013.

PennyMac Mortgage Investment Trust (PMT)

Current Shares: 3,570,000

Value: $80,968,000

Weighting: 19.8%

Down 9% over 12 months, PennyMac Mortgage Investment Trust, a residential REIT, has a market cap of $1.61 billion; its shares were traded at around $22.94 with a P/E of 7.30. The dividend yield is 10%.

PMT is not ranked for business predictability.

Track historical data:


Guru Action: As of Sept. 30, 2013, Kyle Bass made a new buy of 3,570,000 shares at an average price of $21.84 per share, for a gain of 4.3%.

The GuruFocus analysis of PMT shows five warning signs.

Vodafone Group PLC (VOD)

Current Shares: 1,349,200

Value: $47,465,000

Weighting: 11.6%

Up 55% over 12 months, Vodafone Group PLC has a market cap of $189.2 billion; its shares were! traded a! t around $39.14 with a P/E of 273.80. The dividend yield is 4.00%.

Vodafone Group PLC is a provider of mobile communications services and products in Germany, Italy, Spain, UK, Europe, India and Africa, Middle East and Asia Pacific.

GuruFocus ranked VOD with one out of five stars for business predictability.

Track historical data:


Guru Action: As of Sept. 30, 2013, Kyle Bass made a new buy of 1,349,200 shares at an average price of $31.01 per share, for a gain of 25.9%.

The GuruFocus analysis of VOD shows nine warning signs.

Microsoft Corporation (MSFT)

Current Shares: 1,500,000

Value: $49,920,000

Weighting: 12.2%

Up 38% over 12 months, Microsoft Corporation has a market cap of $309.54 billion; its shares were traded at around $37.45 with a P/E of 13.70. The dividend yield is 2.60%.

GuruFocus ranked MSFT with three out of five stars for business predictability.

Track historical data:


Guru Action: As of Sept. 30, 2013, Kyle Bass made a new buy of 1,500,000 shares at an average price of $32.90 per share, for a gain of 12.7%.

The GuruFocus analysis of MSFT shows two good signs and five warning signs.

Here is the complete portfolio of Kyle Bass.

Prior to starting his own company, Kyle Bass worked as a Senior Managing Director at Bear, Stearns & Co., and as a Managing Director at Legg Mason Inc. Bass graduated with honors with a Bachelor of Business Administration from Texas Christian University.

If you are not a Premium Member, we invite you for a 7-day Free Trial.

GuruFocus Real Time Picks reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 2 days after the date of the transaction. This feature is for Premium Members only.

Also ch! eck out: Kyle Bass Undervalued Stocks Kyle Bass Top Growth Companies Kyle Bass High Yield stocks, and Stocks that Kyle Bass keeps buying
About the author:

Sally Jones

Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."
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PMT STOCK PRICE CHART 22.88 (1y: -8%) $(function() { var seriesOptions = [], yAxisOptions = [], name = 'PMT', display = ''; Highcharts.setOptions({ global: { useUTC: true } }); var d = new Date(); $current_day = d.getDay(); if ($current_day == 5 || $current_day == 0 || $current_day == 6){ day = 4; } else{ day = 7; } seriesOptions[0] = { id : name, animation:false, color: '#4572A7', lineWidth: 1, name : name.toUpperCase() + ' stock price', threshold : null, data : [[1356588000000,24.92],[1356674400000,24.85],[1356933600000,25.29],[1357106400000,26],[1357192800000,26.2],[1357279200000,25.82],[1357538400000,26.42],[1357624800000,27.28],[1357711200000,27.2],[1357797600000,27.64],[1357884000000,27.66],[1358143200000,27.64],[1358229600000,27.74],[1358316000000,27.74],[1358402400000,28.06],[1358488800000,28.27],[1358834400000,28.73],[1358920800000,28.49],[1359007200000,27.37],[1359093600000,27.07],[1359352800000,26.9],[1359439200000,26.93],[1359525600000,26.32],[1359612000000,26.6],[1359698400000,26.71],[1359957600000,26.27],[1360044000000,26.43],[1360130400000,26.6],[1360216800000,25.47],[1360303200000,25.88],[1360562400000,25.85],[1360648800000,26.14],[1360735200000,26.05],[1360821600000,25.6],[1360908000000,25.36],[1361253600000,24.76],[1361340000000,24.36],[1361426400000,24.17],[1361512800000,24.62],[1361772000000,24.61],[1361858400000,24.78],[1361944800000,25.37],[1362031200000,25.42],[1362117600000,25.52],[1362376800000,25.32],[1362463200000,25.59],[1362549600000,25.25],[1362636000000,24.79],[1362722400000,24.73],[1362978000000,24.58],[1363064400000,24.59],[1363150800000,25.51],[1363237200000,25.62],[1363323600000,25.41],[1363582800000,25.31],[1363669200000,25.14],[1363755600000,25.07],[1363842000000,25.01],[1363928400000,25.3],[1364187600000,25.55],[1364274000000,25.73],[1364360400000,25.63],[1364446800000,25.89],[1364792400000,25.41],[1364878800000,25.38],[1364965200000,24.68],[1365051600000,25.26],[1365138000000,25.63],[1365397200000,26.07],[1365483600000,25.97],[1365570000000,26.02],[1365656400000,25.81],[1365742800000,25.35],[1366002000000,24.12],[1366088400000,24.34],[1366174800000,23.81],[1366261200000,23.53],[1366347600000,23.8],[1366606800000,24.13],[1366693200000,24.22],[1366779600000,23.87],[1366866000000,23.78],[1366952400000,24.47],[1367211600000,25.25],[1367298000000,25.25],[1367384400000,24.9],[1367470800000,25.04],[1367557200000,24.61],[1367816400000,24.62],[1367902800000,25.32],[1367989200000,25.36],[1368075600000,25.65],[1368162000000,25.51],! [1368421200000,25.04],[1368507600000,23.99],[136859400000

The Only "Crash Talk" Worth Trading

You've no doubt heard the "crash talk" intensifying after two triple-digit down days. But after reviewing more than 100 commentaries, there are exactly two and a half I take seriously.

The one we'll start with can not only help you now - as in today. It can also give you a permanent edge, because most people will never know how it works.

That's a shame.

The indicator you're about to see has predicted every major market inflection point since 1985.

And that's why I need to show you its current "readings" while there's something you can do about it all. We'll look at four moves, in fact. Taking an initial stake in the shares below - or adding to your position - is just one of them...

First, here's the indicator that can give you as much as a 30-day "heads up"...

The "Hindenburg Omen," and Why We Take It Seriously

Named after the airship disaster of May 6, 1937, the Hindenburg Omen is about as doom-and-gloom as it gets. It's also esoteric, which leads a lot of people who don't understand it to pooh-pooh it.

That's a mistake.

The Hindenburg is one of the most insightful indicators out there, for two reasons:

1.) It's predicted every major market inflection point since 1985; and
2.) It's up to 90% accurate in predicting market selloffs resulting in at least a 5% correction within 30 days.

That sounds bad, but it doesn't have to be.

The Hindenburg is like a warning light on the dashboard in your car. In that sense, the real value is not that it's flashing... or even that it's lit.

What the Hindenburg is telling you is to prepare ahead of time or, for lack of a better description, to check under the hood before you have a problem.

There are very few stock market indicators that afford you the luxury of knowing what could happen before it does.

The other important thing to understand here is that 90% is not 100%. Despite the fact that the Hindenburg had triggered five readings in the last nine trading sessions as of Tuesday night, there are no guarantees the markets will crash - 10% is a lot of wiggle room.

Remember, the only sure things in life are death and taxes. Everything else is just a possibility.

Bernanke's meddling and trillions of dollars, for example, should have us living in a modern-day version of the Weimar Republic with 1,000% inflation or more. But we're not.

The Fed was guaranteed to fail, according to plenty of economists - yet it hasn't. I wish they'd dismantle it, but that's another issue.

Everybody "knew" Facebook was a slam-dunk IPO - only investors were the ones who got slammed.

That's why it's important to put things in perspective and view the Hindenburg for what it is: a dashboard warning light, albeit a very accurate one - especially since we've had back-to-back triple-digit declines this week.

So here's what to do when it flashes... 

Reading the Hindenburg Omen

1.) It has correctly predicted a market crash up to 90% of the time.

2.) It picks up on something really weird going on in the markets. The "Omen" triggers when two things happen on the same trading day: 1) at least 2.8% of all 2,800+ securities listed on the NYSE hit a 52-week HIGH and 2) at least 2.8% hit a 52-week LOW. We just don't see that kind of extreme pricing action under "normal" market conditions. It suggests a lack of conviction that may spell trouble.

3.) It usually signifies a serious crash ahead - and soon. A confirmed Hindenburg Omen sets up at least a 77% likelihood of a move to the downside of 5% or more in the next 30 days.

4.) It's "flashed" 11 times in the past four months. First on April 5, again in May, three times in June, and six times (so far) in August. This clustering is extremely unusual. It happened just ahead of the 2000 and 2007 crashes.

Check the Market's "Oil"

It's hard to view the markets in isolation; there is no silver bullet. Therefore, the first thing I do when I get a reading from the Hindenburg is to check it against other trusted indicators.

Again, I'm not looking for absolute answers but, rather, relative information.

Right now, the markets are very long in the tooth, meaning the rally has run a long way without a substantial correction. How long may actually startle you.

We've been riding the bull for 54 months off of March 2009 lows. Since 1953, the average bull run has ended after 43 months, so you could easily argue that we're overdue for a correction. The very longest rallies have been 56 to 60 months, so we are coming close to record-setting territory.

That, in and of itself, makes me nervous because any time you start talking about extremes, you have to factor in the unthinkable. To me there's one way to spell that - B-E-R-N-A-N-K-E.

He and his financial boffins have meddled with these markets so long and so extensively that anything resembling normal market functions has gone by the wayside.

They keep pumping money into a system that was destroyed by too much money in the first place. They might as well yell last call in a room full of bar-flies on the assumption that doing so will help them stop drinking.

Which brings me to the remaining one-half piece of worthwhile "crash talk"...

It's Time to Make a Decision

Top 5 Heal Care Stocks To Watch For 2014

Structurally, the economy is a disaster. Earnings are slowing, breadth is not what it should be for a real recovery, and the jobs situation is still several million people in the hole.

Normally, these things would kill a financial market. But right now, the meme is that "bad is good"... as in, good enough for more stimulus. Days like today (Wednesday) with the Dow off triple digits make me question how long the Fed can continue pulling rabbits out of the proverbial hat, but that's really another question entirely.

What we have to do right now is decide whether to play ball or not.

I say, play ball.

So here's what to do...

1.) "Don't fight the fed" is now "don't fight the feds" - plural; every central banker around the world is in on it. As long as they don't pitch a taper tantrum, odds favor yet more upside, as hard as that is to believe. So we want to be along for the ride with the best "glocal" companies we can find. Very shortly, we'll begin transitioning to "global challengers" to keep up with Bernanke's successor and as a means of hedging our bets. I don't know about you, but I'd rather place my eggs in a basket overseen by experienced, savvy C-Level executives than a bunch of politicians who haven't got a clue how real money works.

2.) We're already taking profits and tightening up our trailing stops. This ensures that we are along for the ride, while also protecting us against the possibility of a market pause or something more serious if it develops.

3.) We're confining new purchases to companies still involved in unstoppable growth and backed by trillions of dollars in upcoming spending. It's important to remember that markets come and go but companies can continue to grow through it all. Many corrections occur with no changes whatsoever in the underlying business fundamentals, which means the best companies - our recommendations - are put on "sale." I know that's hard to stomach, but ask yourself this if you can't get past the notion... would you rather go to your favorite store and pay too much or pick up something after it's been put out at a discount?

4.) Over the past few months I've been following other indicators as the markets have risen and recommending that we add to holdings like the RYURX, GLD, and RCS among others. These are all important stabilizers that have historically risen even as other assets have fallen. This means we can afford the luxury of riding out a correction calmly, logically, and with an eye to the future. Studies show that as little as 3-5% of overall assets invested in these sorts of things can preserve income, too which is vitally important to our financial success.

What to Watch Now

I'm following 10-Year Treasuries closely. Yields shot up to 2.821% - a two-year high - which suggests that the Fed is losing control over interest rates.

If there is no support for bonds in the months ahead, you can bet the nearly $500 trillion global interest rate derivatives market will reset... and that really will cause a crash.

Stay tuned...

Wednesday, December 25, 2013

Citigroup Beats Q2 Earnings Consensus; Joint Venture Results Disappoint

Citigroup reported a stronger-than-expected 26% rise in adjusted quarterly profits, thanks to stronger home prices, which reduced losses on mortgages, and better trading revenue.

Adjusted net income rose to $3.89 billion, or $1.25 per share, in the second quarter, from $3.08 billion, or $1 per share, a year earlier, the bank said Monday. (The adjusted results exclude changes in the value of the company's debt.)

Adjusted revenue jumped 8% to $20 billion. Sales in the fixed-income unit improved 18% to $3.37 billion, and equity market revenue grew 68% to $942 million.

“Generating consistent and quality earnings is a key priority and this quarter met that goal,” Citi CEO Michael Corbat said in a statement.

Morgan Stanley Smith Barney Venture

Citi Holdings, which includes Citi’s remaining interest in the Morgan Stanley Smith Barney joint venture, reported negative revenues of $20 million for its brokerage and asset management business versus sales of $87 million a year ago.

Citi also acknowledged that it had completed the sale of the final 35% stake it held in the venture over the past few weeks. With $131 billion in assets, Citi Holdings now includes about 7% of total company assets.

(Morgan Stanley plans to report its wealth management and other earnings on Thursday.)

“Our businesses performed well during the quarter … We also continued to make progress in several critical areas," Corbat said. "We reduced the earnings drag caused by Citi Holdings, where we saw the largest percentage reduction of assets since 2010.”

Array - Loxo Collaborate - Analyst Blog

Array BioPharma, Inc. (ARRY) and Loxo Oncology, Inc recently announced a license and collaboration agreement. The agreement involves a multi-year licensing and collaboration deal for a preclinical development candidate (discovered by Array) and related intellectual property. Loxo and Array will also collaborate for the discovery and development of small molecule drugs targeting novel oncology indications.

Array's preclinical research activities under the deal will be funded by Loxo. Loxo will select targets and carry out studies. The agreement makes Array eligible for milestone payments up to $434 million as well as royalties on sales of any drugs developed and commercialized under this deal. Array also received shares in Loxo.

This deal is in line with Array's strategy of focusing on oncology. Array has entered into several collaborations with big companies and amassed a total of $577.9 million in research funding and up-front and milestone payments from collaboration partners from inception till Jun 30, 2012.

The company has also been quite active in collaboration activities this year. In May 2013, Array entered into a collaboration agreement with Oncothyreon Inc. (ONTY) to develop and commercialize ARRY-380, which is being developed for the treatment of breast cancer. According to the agreement, Array will receive an upfront fee of $10 million on the initiation of the collaboration. Similar to the collaboration with Loxo, this agreement also includes the funding of clinical development by Oncothyreon.

Array is focused mainly on the development and commercialization of targeted small molecule drugs for the treatment of cancer patients. We note that it has graduated into a late-stage development company with a few candidates approaching phase III by the end of 2013.

The company recently initiated a phase III study (MILO: n=300) on MEK162 in patients suffering from low-grade serous ovarian cancer (LGSOC). It consequently received a $5 million milestone payment ! from partner, Novartis AG (NVS), following the initiation of the study.

Currently, Array BioPharma carries a Zacks Rank #2 (Buy). However, biopharma stocks such as Jazz Pharmaceuticals Public Limited Company (JAZZ) look more attractive with a Zacks Rank #1 (Strong Buy).

Tuesday, December 24, 2013

Will Electronic Arts Surge Higher?

With shares of Electronic Arts (NASDAQ:EA) trading around $21, is EA an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Electronic Arts develops, markets, publishes, and distributes game software content and services that can be played by consumers on a variety of video game machines and electronic devices. Its offers video game products through gaming consoles such as the Sony Playstation 3, Microsoft Xbox 360 and Nintendo Wii. Electronic Arts’s products can also be used on personal computers, mobile devices, tablets, electronic readers, and social networking sites which include popular platforms such has PCs, Apple Mac, Apple iPhone, Google Android, Apple iPad, Amazon Kindle, and Facebook. Consumers are always looking for new forms of entertainment, through its product offerings, Electronic Arts is able to provide valuable experiences worldwide.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

T = Technicals on the Stock Chart are Strong

Electronic Arts stock has displayed a downtrend over the last several years. However, the stock has made a magnificent run since hitting multi-year lows just last year. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Electronic Arts is trading above its rising key averages which signal neutral to bullish price action in the near-term.


(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Electronic Arts options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Electronic Arts Options




What does this mean? This means that investors or traders are buying a very small amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Top Penny Companies To Buy For 2014

Put IV Skew

Call IV Skew

June Options



July Options



As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very small amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Decreasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Electronic Arts’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Electronic Arts look like and more importantly, how did the markets like these numbers?

2013 Q1

2012 Q4

2012 Q3

2012 Q2

Earnings Growth (Y-O-Y)





Revenue Growth (Y-O-Y)





Earnings Reaction





Electronic Arts has seen decreasing earnings and revenue figures over most of the last four quarters. From these figures, the markets have been very excited about Electronic Arts’s recent earnings announcements.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

P = Excellent Relative Performance Versus Peers and Sector

How has Electronic Arts stock done relative to its peers, Activision Blizzard (NASDAQ:ATVI), Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), and sector?

Electronic Arts

Activision Blizzard




Year-to-Date Return






Electronic Arts has been a relative performance leader, year-to-date.


Electronic Arts provides entertaining game experiences that are highly valued by consumers worldwide. The stock has seen an amazing run over the last couple of years is and is still surging higher. Earnings and revenue figures have been decreasing over most of the last four quarters, however, investors have generally been pleased with Electronic Arts’s earnings announcements. Relative to its peers and sector, Electronic Arts has been a year-to-date performance leader. Look for Electronic Arts to OUTPERFORM.

4 Tech Stocks Rising on Unusual Volume

 DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

With that in mind, let's take a look at several stocks rising on unusual volume today.


AOL (AOL) is a global Web services company whose business consists of online content, products and services that it offers to consumers, publishers and advertisers. This stock closed up 1.4% to $36.69 in Wednesday's trading session.

Wednesday's Volume: 4.52 million

Three-Month Average Volume: 1.15 million

Volume % Change: 285%

From a technical perspective, AOL jumped modestly higher here back above its 50-day moving average of $36.29 with heavy upside volume. This move is quickly pushing shares of AOL within range of triggering a major breakout trade. That trade will hit if AOL manages to take out some near-term overhead resistance levels at $38.48 to $40 with high volume.

Traders should now look for long-biased trades in AOL as long as it's trending above its 50-day at $36.29 or above more support at $35 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.15 million shares. If that breakout hits soon, then AOL will set up to re-fill its previous gap down zone from May that started at $42.12. Any high-volume move above $42.12 will then give AOL a chance to tag $45 to $50.


VimpelCom (VIP) provides voice, data and other telecommunication services through an array of wireless, fixed and broadband internet services, as well as selling equipment and accessories. This stock closed up 4.4% at $10.32 in Wednesday's trading session.

Wednesday's Volume: 2.62 million

Three-Month Average Volume: 1.03 million

Volume % Change: 230%

Shares of VIP ripped higher on Wednesday after Deutsche Bank upgrade the stock to buy from hold citing valuation following the company's second-quarter results.

From a technical perspective, VIP ripped higher here back above its 50-day moving average of $10.09 with strong upside volume. This stock recently formed a double bottom chart pattern at $9.75 to $9.78. Following that bottom, shares of VIP have started to spike higher and quickly move within range of triggering a near-term breakout trade. That trade will hit if VIP manages to take out some near-term overhead resistance levels at $10.64 to $11 with high volume.

Traders should now look for long-biased trades in VIP as long as it's trending above its 50-day at $10.09 or above more support at $9.78 and then once it sustains a move or close above those breakout levels with volume that this near or above 1.03 million shares. If that breakout triggers soon, then VIP will set up to re-test or possibly take out its next major overhead resistance levels at $11.38 to $11.82.

WebMD Health

WebMD Health (WBMD) provides health information services to consumers, physicians and other health care professionals, employers and health plans through its public and private online portals and health-focused publications. This stock closed up 1.6% at $33.70 in Wednesday's trading session.

Wednesday's Volume: 1.32 million

Three-Month Average Volume: 690,686

Volume % Change: 170%

From a technical perspective, WBMD spiked modestly higher here with strong upside volume. This stock has been uptrending strong for the last month and change, with shares moving higher from its low of $25.18 to its recent high of $35.28. During that move, shares of WBMD have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of WBMD within range of triggering a major breakout trade. That trade will hit if WBMD manages to clear its 52-week high at $35.28 with high volume.

Traders should now look for long-biased trades in WBMD as long as it's trending above $32 or $31 and then once it sustains a move or close above its 52-week high at $35.28 with volume that's near or above 690,686 shares. If that breakout hits soon, then WBMD will set up to enter new 52-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $43.

Geospace Technologies

Geospace Technologies (GEOS) designs and manufactures instruments and equipment used by the oil and gas industry in the acquisition and processing of seismic data as well as in reservoir characterization and monitoring activities. This stock closed up 0.29% at $72.35 in Wednesday's trading session.

Wednesday's Volume: 620,000

Three-Month Average Volume: 158,544

Volume % Change: 270%

From a technical perspective, GEOS spiked higher here and briefly traded back above its 50-day moving average of $75.28 with strong upside volume. This stock has been downtrending badly for the last five months, with shares plunging from its high at $111.36 to its recent low of $65.31. During that move, shares of GEOS have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of GEOS have started to rebound over the last month from $65.31 to its recent high of $79.91. That rebound could be setting up GEOS to reverse its downtrend and begin a more sustained uptrend.

10 Best Gold Stocks To Watch Right Now

Traders should now look for long-biased trades in GEOS as long as it's trending above Wednesday's low of $70.40 and then once it breaks out above some near-term overhead resistance levels at $77.83 to $79.91 with volume that's near or above 158,544 shares. If that breakout hits soon, then GEOS will set up to re-test or possibly take out its 200-day moving average of $84.97. Any high-volume move above $84.97 will then give GEOS a chance to tag its next major overhead resistance levels at $90 to $93.

To see more stocks rising on unusual volume, check out the Stocks Rising On Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

Monday, December 23, 2013

What Does the Future Hold For Zillow?

The Fool recently explored Seattle. Today, CEO Spencer Rascoff introduces us to Zillow (NASDAQ: Z  ) , telling us how the online home and real estate marketplace works, what he considers its greatest strengths, and what investors should know about it.

Looking ahead five years, Spencer foresees a major emphasis on mobile services, and expects the brand name to become a household word. Spencer also explains why he identifies with tech companies such as OpenTable and WebMD.

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Austin Smith: A lot of young products in your pipeline. Five years out, you've got some slightly more mature revenue streams. What does Zillow look like?

Spencer Rascoff: Wow. Well, five years from now we're -- almost exclusively might be a little bit of an overstatement -- but a predominantly mobile company. We already are, 55%-60% of our usage is mobile. Five years from now, who knows what that number will be, but it'll be very, very significant. Usage of Zillow on smartphones and tablets will be massive.

I think we'll have a much bigger brand. Today we're about 50 million uniques in the U.S., but only about 12% of Americans recognize the brand name Zillow. We're spending tens of millions of dollars on advertising in 2013 to try to change that. By five years from now, I think the Zillow brand name will be as widely recognized as Netflix or Expedia or other vertical-leading brands.

Of course at that point, we become more of a must-buy for local advertisers in real estate, mortgages, rentals, and home improvement because if they want to grow their business they need to advertise on Zillow, which will be the leading brand in our category.

Austin: I know we talked about maybe companies that you guys might ... what other young, successful tech companies -- maybe Netflix -- do you guys identify with, associate with?

Spencer: From a strategy standpoint, I identify a lot with OpenTable because they have a great mobile presence and a desktop presence, which attracts an audience of consumers, and then they provide software tools to the restaurants, so they marry lead generation with SaaS B2B software tools so, strategically, I look at OpenTable quite a bit.

I look at WebMD a lot from an industry standpoint, in the sense that WebMD is no more a threat to doctors than Zillow is a threat to real estate agents. Consumers go to WebMD to learn information about their ailments, but then they go to a doctor to help them interpret it.

Consumers go to Zillow to learn about real estate, but then they go to a professional real estate agent or mortgage lender to help them interpret the information.

Google Introduces Upgraded Maps App

Nearly a month after its acquisition of mobile map service provider Waze, Google (NASDAQ: GOOG  ) has updated its map app for both smartphones and tablets, the company announced today.

The new, upgraded Google Maps is compatible with both smartphones and tablets running Android OS, and will soon be available for Apple's (NASDAQ: AAPL  ) iPhones and iPads. Google's December 2012 release of Maps was not compatible with iPads.

According to Google's blog, the new Maps app has several enhanced features, including one-touch browsing, enhanced navigation, and Zagat reviews of local businesses. Similar to Waze, the new Google Maps allows users to access potential road condition problems, including incident details, and suggest an alternative route, if one is available.

Google also announced that beginning Aug. 9, Google Maps Latitude, which lets users share their location, and check-in features will no longer be compatible with the upgraded Maps, and will "be retired from older versions." Google also said its offline Maps feature is no longer available.


Sunday, December 22, 2013

Best Buy Is One Step Closer to J.C. Penney

Ron Johnson's flawed experiment to turn J.C. Penney (NYSE: JCP  ) around by opening branded mini-stores in the department-store chain is alive and well at Best Buy (NYSE: BBY  ) .

Shares of Best Buy moved higher on Thursday on news that Microsoft (NASDAQ: MSFT  ) will open hundreds of stores inside Best Buy's cavernous superstores this summer. Best Buy stock also moved nicely higher when Samsung announced an even larger mini-store initiative two months ago.

The market eventually soured on Johnson's vision when it failed to generate sales growth at J.C. Penney. A similar fate may also await Best Buy.

On paper, the move is brilliant. Best Buy has extra room. As consumers migrate to digital music, games, and movies, there's less reason for Best Buy to continue stocking CDs, software, and DVDs. Best Buy's recent fadeout of musical instruments also creates more space. The company is an empty-nester. Why shouldn't it rent out the extra rooms after its children move out?

The "store in a store" concept should also help attract shoppers, and that's been sorely lacking at Best Buy, with physical-store sales declining for most of the past two years.

Microsoft also has plenty to gain here by opening 500 stores -- some as big as 2,200 square feet -- inside Best Buy locations, where shoppers continue to choose non-Microsoft smartphones and tablets. It will be staffing the stores with 1,200 employees, and while that breaks out to two to three Microsoft ambassadors per location, that's two to three more people at Best Buy who can talk an undecided shopper into choosing its PC, mobile, and gaming solutions.

The ultimate question is whether two brands that aren't as cool as they were a decade ago can regain some of that swagger by teaming up. At least J.C. Penney has the luxury of fleshing out its makeover by picking out brands that are on the rise. Best Buy did that with Samsung earlier this year, but it may be a different story with Microsoft if shoppers avoid Lumia smartphones and Surface RT tablets the way they are outside of Best Buy. 

In what may prove to be a cruel case of foreshadowing, Microsoft's video promoting the new Best Buy stores features a single person checking it out.

Microsoft and Best Buy had better hope that isn't the case, just as Samsung may be wondering if it just got hosed by having to set up shop alongside Mr. Softy.

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Saturday, December 21, 2013

Why Houston Wire & Cable's Earnings May Not Be So Hot

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Houston Wire & Cable (Nasdaq: HWCC  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Houston Wire & Cable generated $12.8 million cash while it booked net income of $16.9 million. That means it turned 3.3% of its revenue into FCF. That sounds OK. However, FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Houston Wire & Cable look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With questionable cash flows amounting to only 6.2% of operating cash flow, Houston Wire & Cable's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, changes in taxes payable provided the biggest boost, at 11.4% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts payable, which represented 30.8% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

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It's Showtime for Autoliv

Autoliv (NYSE: ALV  ) is expected to report Q1 earnings on April 26. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Autoliv's revenues will shrink -4.1% and EPS will wane -21.2%.

The average estimate for revenue is $2.09 billion. On the bottom line, the average EPS estimate is $1.23.

Revenue details
Last quarter, Autoliv reported revenue of $2.05 billion. GAAP reported sales were 0.4% higher than the prior-year quarter's $2.04 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at $1.58. GAAP EPS of $1.45 for Q4 were 15% lower than the prior-year quarter's $1.70 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 19.3%, 170 basis points worse than the prior-year quarter. Operating margin was 9.4%, 180 basis points worse than the prior-year quarter. Net margin was 6.8%, 100 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $8.43 billion. The average EPS estimate is $5.60.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 374 members out of 392 rating the stock outperform, and 18 members rating it underperform. Among 142 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 138 give Autoliv a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Autoliv is hold, with an average price target of $65.37.

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